Tax Investigation
Support
Received a letter from HMRC? Do not respond without professional advice first. We represent individuals and businesses throughout HMRC enquiries and tax investigations, protecting your position and working to achieve the best possible outcome.
The single most important thing you can do is take professional advice before you respond
An HMRC enquiry letter is a serious matter, even when the underlying issue is minor. What you say in your initial response, what records you disclose and how you frame your answers can all significantly affect the outcome. Taxpayers who respond directly without professional representation routinely end up paying more than they need to, and sometimes raise additional questions that HMRC would not otherwise have asked.
HMRC has extensive information-gathering powers and access to a wide range of data sources including bank records, Land Registry data, Companies House filings, offshore account information under the Common Reporting Standard, and data shared by employers, letting agents and online platforms. In many cases they already have information before they contact you.
At Harnett and Co we handle all communication with HMRC on your behalf from the moment you instruct us. We review the enquiry, assess the risk, advise you on your position and negotiate with HMRC to reach the best possible outcome. We also offer tax investigation fee protection insurance for clients who want to protect against the cost of professional fees if an investigation arises.
Every type of HMRC enquiry and investigation
We represent individuals, sole traders, partnerships and limited companies across the full range of HMRC compliance activity from routine enquiries through to serious civil investigations.
Not all HMRC enquiries are the same - understanding what you are dealing with matters
HMRC uses different powers and processes depending on the nature and seriousness of the suspected non-compliance. A routine aspect enquiry into one line of your tax return is very different from a full enquiry into your entire tax affairs, and both are very different from a formal investigation by HMRC's Fraud Investigation Service.
Knowing what type of enquiry you are dealing with determines the correct response strategy. Responding to a serious investigation as if it were a routine enquiry can be costly. Treating a routine enquiry as more serious than it is can also be counterproductive and expensive.
When you contact us we will review the correspondence you have received, identify the type and scope of the enquiry, and advise you on the appropriate response strategy before a single word is sent to HMRC.
Penalties range from 0% to 200% of the unpaid tax - where you land depends heavily on how the matter is handled
HMRC's penalty regime for inaccuracies in tax returns is behaviour-based. The penalty percentage applied depends on whether the error was careless, deliberate or deliberate and concealed, and whether the disclosure was prompted by HMRC or made voluntarily before HMRC raised the issue.
The difference between a prompted and unprompted disclosure, and between a careless and a deliberate inaccuracy, can be tens of thousands of pounds on a substantial tax liability. Getting the characterisation of the behaviour right, and presenting the case for the lowest applicable penalty rate, is one of the most valuable things we do in an investigation.
In addition to the penalty on the tax, HMRC also charges interest on late paid tax at the Bank of England base rate plus 2.5%. This runs from the date the tax was originally due and cannot be reduced through negotiation, which is another reason that early resolution is in your interest.
A structured approach to protect your position at every stage
From the moment you instruct us we take control of the situation so you do not have to navigate HMRC alone.
Initial review
We review the HMRC correspondence, assess the type and scope of the enquiry and advise you clearly on your position before you respond to anything.
Records review
We review your records, identify any issues, quantify the potential exposure and form a clear strategy before engaging with HMRC.
HMRC engagement
We handle all correspondence and meetings with HMRC on your behalf. No direct contact between you and HMRC unless we advise otherwise.
Settlement and closure
We negotiate the settlement, seek maximum penalty reduction for quality of disclosure and obtain a formal closure notice from HMRC.
If you have undisclosed tax liabilities, coming forward voluntarily is almost always the right decision
HMRC operates a range of disclosure facilities that allow individuals and businesses to come forward and correct their tax affairs before HMRC discovers the issue through its own enquiries or data matching. Voluntary unprompted disclosure consistently results in significantly lower penalties than waiting for HMRC to open an investigation.
The most common disclosure situations we handle are undisclosed rental income from residential property (the Let Property Campaign), undisclosed offshore income or assets (the Worldwide Disclosure Facility), undisclosed self-employment income and income not included on a self assessment return.
The process involves calculating the total liability across all affected years, including interest, preparing the disclosure and submitting it through the appropriate HMRC facility. We handle the entire process and negotiate the penalty with HMRC to achieve the best possible outcome for your situation.
Tax investigation questions answered
Do not face HMRC alone
Whether you have received an enquiry letter, are considering a voluntary disclosure or simply want to understand your position, speak to us today. All enquiries are treated with complete confidentiality.